Will Facebook’s acquisition spur the Indian startup sector?

Facebook’s acquisition of Bangalore-based Android app development company Little Eye Labs could spur the Indian startup sector

Facebook’s acquisition of Bangalore-based Android app development company Little Eye Labs could create waves in the Indian startup sector.

Little Eye Labs, which helps developers analyze, optimize and measure apps, was acquired by Facebook in January this year. The entire Little Eye Labs team will move to Facebook’s headquarters in California to work on improving the performance of Facebook’s apps.

Little Eye Labs was founded in August 2012 by four programmers: Kumar Rangarajan, who has worked at HP and IBM; Giridhar Murthy, a former Apple employee; Satyam Kandula, an alumnus of IIT Kharagpur; and ex-IBMer Lakshman Kakkirala.

The company’s seed fund came from Venture East Fund and GSF Superangels. The Facebook takeover demonstrates how Indian companies can compete globally.

Subbu Subramanian, Facebook engineering manager, said: “This is an opportunity to welcome some of the industry's most talented engineers to our team.” 

Last year, Facebook acquired Tagtile, another Indian startup, and Google recently acquired three-year-old Indian cyber security firm Impermium.

Investing in Indian entrepreneurs

The BBC suggested the acquisition of Little Eye Labs could signal the start of a continuing trend of US firms going for Indian startups. The startup community in India is already enthused, and many believe that more such acquisitions and transfers will follow. According to reports, about 15% of Silicon Valley tech startups have Indian founders.

While Little Eye Labs had Venture East Fund and GSF Superangels on its side, many others fail to get the funding to put their ideas in place. But the Indian government has introduced the India Inclusive Innovation Fund (IIIF) that will create a new class of capital to help scale innovation and entrepreneurial skills. The idea is to support ventures that have the potential to succeed and are profitable, sustainable and scalable.

The IIIF has been conceptualized by the National Innovation Council (NInC) and is supported by Ministry of Micro, Small and Medium Enterprises (MSME). In the private sector too, ventures such as Bharti SoftBank (BSB) are already bankrolling a number of startups.

Subhashish Panigrahi, program officer at the Center for Internet and Society, said: “The startup sector is booming in India. In the past few years many fresher-graduates have started their own organizations. Thinking of surviving from startup used to be even a hard dream. But look at today's generation. It is completely changed. The peculiar thing is that many start working in multinational companies after graduating just to save up money to invest in their own startups. Today, getting sponsors has also become easier.”

Jayant Sinha, a venture capitalist from Mumbai, said Indian startups are entering into appreciable relationships with Silicon Valley: “We are going beyond being seen as a hub for simple outsourcing [to become] the main base for talent and innovation.”

Navneet Kapoor, president and managing director of Target India – the technology unit that supports US retailer Target Corporation – told the Business Standard it is in the process of launching an incubator for startups working in technologies such as analytics, search and content. 

“The startup ecosystem is quite rich in India now; there is plenty of talent and companies. Many of them have one foot in India and the other in the US. We are looking at working with them to learn and hopefully share with them,” Kapoor told the Business Standard.

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